3 3 e Commerce Lecture Notes

8/6/2019 3 3 e Commerce Lecture Notes

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E-Commerce Lecture Notes


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BayNetworks

IB

M

IBM

IBM

Online Buyer Buyer sBrowser

Merchants

Amazon.comWebsite

Buyers Issuing Bank

Acquiring BankMainFrame

latigid

MerchantsAcquiring Bank

CSP (iCOMS)Open Market

Transact Software

PaymentProcessor

PaymentProcessingMainframes

Issuing BankMainframe

Purchasing Triangle

BrowseCatalog

1

DigitalOffer

2

OrderForm3

RequestAuth

4

5

RequestAuth

6

IssueAuth

7IssueAuth

RequestClearing

8

ClearTxtn.

9

Transaction

Processing

Infrastructure

Commerce ServiceProvider (iCO S)

BayNetworks

AmazonE-Commerce

Service

B2C Purchase Map


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Targeted User odificationechanisms

Getting external useracquisition method

General Internal User AccessInterfaces

User/Customer FulfillmentInterfaces

Enterprise anagement

Interfaces arketing Trends

Search EngineTargeted-E-mail

Advertising (web, printother)

Site user behavioranalysis and

behavior modificationFinancial Reporting

Web Applicationservers

Toll-free call center

application servers

User-behavior-drivenweb ad banners

User-behavior-driven

web page presentation

User-behavior-driven callcenter scripts

Order-entry, trackingand fulfillment status

5Business Activity

Categories12 Fulfillment

Mechanisms


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Life After FulfillmentSearch Engine

Targeted-E-mail

Advertising (web, printother)

Site user behavioranalysis and

behavior modificationFinancial Reporting

Web Applicationservers

Toll-free call center

application servers

User-behavior-drivenweb ad banners

User-behavior-driven

web page presentation

User-behavior-driven call

center scripts

Order-entry, trackingand fulfillment status

External user acquisitionsystems and media

Operational order entry/orderfulfillment back-end servers

Internal front-endweb servers

Call center front-endservers

Enterprise financial management system

Clickstream/call streamdata warehouse


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Principle Goals of E-Commerce

Information Systems

Highly available and highly scalable

operational infrastructure

Massive-scale clickstream/call stream data

warehouse

Alignment of information technology

vendor and e-commerce enterprisesbusiness goals


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Trends in E-Commerce Solutions

Early adopters ofB2C information systems spent

large amount of time and money to customize

solutions.

Now, merchants and Web-application-servervendors are focusing on vertical markets and

tailoring offerings to meet specialized business

needs.

Software solutions will differentiate themselves byfocusing on different vertical markets and by the

way they choose to link components of their

solutions.


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B2C Infrastructural Software

$3.1B market in 1999

Projected to grow to $14.5B by 2003

B

road price range Low-end to mid-range products:


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Technical and Business Challenges

Ideal: Platform core and customized

periphery.

Core still not standardized

Customization still very expensive(because its labor-intensive)

Patents

One-click shopping (Amazon) Online credit-card verification (Open Market)

Legacy technology, especially dbs and other

back-end modules


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Blue Martini

Blue Martini Software, Inc.

2000 Sales (mil): $74.31-Year Sales Growth: 561.1%

2000 Net Income (mil.): ($62.1)

2000 Employees 4731-Year Employee Growth: 101.3%


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IPO IPO

25 July 2000

7.5 million shares

Offering Range - $16.00-18.00

Actual offering price - $20.00

First day closed - $54.78

Offering Amount $150 million

Price at Close (4/18/01) = $2.48 (52 week low)


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Strategy

Provide a comprehensive packaged software

application

simplify deployment accelerate time-to-benefit

reduce total cost of ownership

Target large, vertical markets where brand

management is paramount

retail, manufacturing, financial services,

telecommunications, consumer goods, media


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Software Functionality

Enables companies to author, manage, approve, and trackdevelopment and use of content e.g., graphics, text, video,

audio)

Enables companies to conduct business over multiple

channels, including taking orders and managing returns Software analytic capabilities increase companies abilities

to identify market segments

to target customers by analyzing purchase histories and

modeling customer behavior to target customers across multiple touch points with

meaningful and relevant products, promotions, content


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Stock Performance

(Comparison Index: NASDAQ)


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Revenue and Net Income

-30

-20

-10

0

10

20

30

Mar 99 Jun 99 Sep 99 ec 99 Mar 00 Jun 00 Sep 00 ec 00

Quarters Ending

InMillion

Revenue

Net Income


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Revenues (cont.)

Quarter Ended March 31, 2000

Revenue total = $10.7 million

57% derived from licensing

43% from training, technical support,

consulting services

In 1999 (all quarters)

Revenue = $11.2 million64% software licensing

36% related services


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Open Market

Open Market, Inc. (NASDAQ: OMKT)

Founded, 1994

Anticipating growth of commercial side ofInternet

2000 Sales: $89.0 million

2000 Net Income: ($37.8 million) 52-Week High: $19.63

Current Price: $0.88


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Company History 1996

Despite sales of only $1.8 million in 1995

Market capitalization skyrockets to $1.2 billion on

IPO

4 Million Shares @ $18.00 by Goldman Sachs

Product cost upwards of $1 million, but

customers who wanted to set up shop on Net

had few alternatives

Industry Leaders and Market Leader


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Stock Price

NASDAQ


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Revenue and Net Income

-80

-60

-40

-20

0

20

40

60

80

100

1996 1997 1998 1999 2000

Year

MillionsofU.S.

D

Revenue

Net Income


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Geographic Financials

In M on o

U D

No he a 53 0 59.6% 58 3 70.3% 44.4 68.8%

Un ed

Kingdo 18.0 20.3% 7.2 8.7% 6.4 9.9%

Eu ope 9.0 10.1% 11.6 14.0% 8.1 12.5%

Asia-Pacific 5.2 5.8% 2.8 3.4% 3.1 4.8%

Japan 2.3 2.5% 1.6 1.9% 1.6 2.5%

Othe 1.5 1.6% 1.5 1.8% 1.0 1.6%

Segment

Total 89.0 100.0% 83.0 100.0% 64.5 100.0%

TOTAL REVENUE

12 Months Ending

12/31/2000

12 Months Ending

12/31/1999

12 Months Ending

12/31/1998


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Mistakes (in retrospect)

1997 and 1998

Too much emphasis on large, complex websites

Ignored huge emerging demand for easy, faste-storefront creation

Spread too thin geographically (25 countries)

Misguided acquisition of Folio

Directed effort toward publishing toolsjust as market for e-commerce software was

taking off


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New Product Focus

Announced March 2001

Content Server Enterprise (CSEE)

(Integrated Suite of E-business Solutions)

Built on top of mainstream Java tools sold

by other vendors

Two core technological components:

Content Server

Power Asset (presentation neutral content

warehouse)

3 3 e Commerce Lecture Notes

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